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03 - Accounting & Taxes Accounting Help & Tax Strategies

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Old 05-21-2012, 07:50 PM
ace ace is offline
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Join Date: Aug 2008
Location: KS
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Default non-cash donations

what is the proper way to account for non-cash merchandise donated to a non-profit group or event? For instance, we donate a necklace ($40 retail value, $15 actual cost) to a cancer organization who is a non-profit. We are taxed as an S corp.

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Old 06-04-2012, 09:46 PM
SeattleCPA SeattleCPA is offline
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Location: Redmond, WA
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Default Non-cash contribution

I think you'll need to deduct your cost and not the "retail" value... also, you'll need to report the cost not as a business deduction but rather as a charitable contribution so the contribution correctly flows through to the shareholder via the k-1.

BTW, I always tell clients in your situation that you may just want to throw the inventory away and get a full, easy, good business deduction for scrapping inventory rather than an itemized charitable contribution.
CPA Steve, Downloadable Do-it-yourself Kits:
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